Bitcoin: Digital bullion, or just digital?

In a recent interview on the “Fast Money Halftime Report,” renowned trader Mark Fisher discussed the similarities between the current hype for the cryptocurrency Bitcoin and the silver rush seen in the late 1970s and 1980s. Fisher attributes Bitcoin’s rapid rise in value to its organic popularity (i.e., no meddling by Wall Street) and massive public interest. However, what truly separates Bitcoin from silver is that Bitcoin is a cryptocurrency, while silver is, and most likely always will be, considered a precious metal. Therefore, Bitcoin’s value as a currency is completely determined by the value placed on it by consumers. While some are beginning to consider Bitcoin the first incarnation of digital bullion, there are some important points to consider before placing the same level of trust in it as one would for gold or silver.

A typical Bitcoin transaction. Photo by FlippyFlink.

“Cryptocurrency” is defined as a subset of digital currency in which cryptography is used to securely process transactions that are initiated with more typical currency. Bitcoin made history as the world’s first “decentralized cryptocurrency” in 2009, and many similar cryptocurrencies have begun to arise in its wake. Bitcoin allows users to make secure and confidential transactions that cannot be traced through regular means. The notorious cryptocurrency has soared to over $11,000 in value over the last week, creating a massive boon to investors. However, some experts warn that the chaotic rise of Bitcoin’s value is a testament to its weakness as a currency, rather than its strength, and predict an incoming bubble.

Silver nitrate crystals. Photo by W. Oelen.

Gold and silver, on the other hand, have been considered precious metals for thousands of years by many different civilizations. These precious metals have faced the test of time and consistently came out virtually unscathed in their unquestionable value. Silver is useful in the construction of solar panels and water filtration systems. It is used in disinfecting compounds and important medical instruments, and is considered by chemists to be an important catalyst.

The mirror for the James Webb Space Telescope. It is coated in gold to reflect infrared light.

Gold additionally has some extremely practical uses in electronics and infrared shielding, and is famed for its resistance to acid, corrosion, and chemical reactions. It is important to note that even if their aesthetic value were to diminish as precious metals, their value for industrial purposes will likely never diminish.

While it is an exciting time for Bitcoin investors, it is important to always take everything you read (including this) with a grain of salt. Bitcoin may make for an excellent short-term investment, but gold and silver will almost always be considered an excellent long-term investment.

Comments

Much like the internet in 1998 it had not found it’s legs and therefore was far from ready for mainstream adoption. We all know where that went. However, 20 years later we can’t seem to live without it. It’s impossible to say with any certainty where blockchain and/or cryptocurrency is headed from here, but it arguably can, and most likely will find it’s way into all our lives, if only into most as a storage of records and data. Presently, hardcore believers are viewing Bitcoin as a storage of wealth while many other crytptocurrencies are believed to be the workhorses for payment. Bitcoin’s 1 megabit blockchain size is rather small, so scaling is inevitable. Segwit2x increases the size to 2 megabits, however this is still far to small to be able to handle large amounts of transactions which would be needed for mass adoption. Bitcoin cash is a coin birthed as a result of what is called a hardfork of the blockchain of Bitcoin. Being as such it utilizes the same technology as BTC but with a larger block size of 8 megabits. BTC’s developers along with mining equipment supplier and Bitcoin.com owner Roger Ver had hoped to topple Bitcoins rein by heavily promoting Bitcoin cash without success earlier this year. Bitcoin cash presently garnishes a price in the range of $1,400.00. One would think that 8 megabits in the crypto world would be all that a cryptocurrency needs to be most sought after, but that’s not necessarily the case. Because like anything which can be view as holding value, it has been deemed that Bitcoin with it’s branding is valued at roughly $12,800.00. As of today, the next price target is in the $20,000.00 range. It’s most definitely primed to be a short sellers paradise. However, with a $375 billion marketcap and BTC claiming 55% there will be money waiting to buy the low. In my opinion, it’s much better to value something that I can touch, or in the case of gold possibly have uses beyond primarily investment, but people born into our evermore internet connected world see crypto as a natural and those wanting to profit in the biggest bull market they have ever witnessed are paying attention.

BTW, BTC blockchain is 100% disclosed to pubic viewing and bitcoins themselves are so heavily encrypted that they are impossible to counterfeit. There are some coins which are not viewable and are considered as private. Many of them have seen a recent surge in price of several hundred percent.

Dusty, great write up, but alas I am lost as in my old Astronomy 310 class, I was good @ the 100’s 200+ @ UCLA wow, math never a forte, & I used to do coding for COBAL, etc., but the whole blockchain stuff has passed me by like a Ferrari. Regardless, it has a value like cons, 1) Whatever some1 is willing to pay, 2) or what you can trade it for or 3) if you can park assets in it, like $10k in ONE bitcoin? I don’t get it nor see it, but I used to ‘collect US Stamps & they went boom years ago, the market has NEVER recovered, ask someone under 30 about collecting stamps ( I was a nerd when they did back when) I fear greatly coins are going there, collector better dates, that are not top dogs (’93-s MOrgan, o9-S VDB’s etc…) will see a fall as who is coming “on line” to buy them–.as IPS confirms sales on ebay are slow, unless you want to start @ 99c & chance it, alot of maroons have a reserve price, why bother, just start @ your bottom $#. I understand a reserve @ a live auction but for internet/eBay why waste everyones time. BUllion has been a store of value for 1,000’s of years & will always be, but for how much, 8 oz. AG for 1 bitcoin…I woild pass…..I;m now a luddite…..

My take on Bitcoin is that its only an “idea” of “money” without any back to it at all. Bitcoin has no manifestation of reality to this world. It has no past, it has no future. It’s just an overly tempting bit of cotton candy but and delivers a satisfying taste lower than a hearty big bowl of steam. It’s just a cruel “game” of Last Person to be Found Standing! Really sad.

I saw an article on another site about the launch of that awful looking(MO) WWI coin and it one pic shows the “artist/designer” posing with the coin. One poster noted that the coin looked like the artist …. and I took a closer look and there does seem to be a resemblance esp. with the crooked nose .. maybe I’m just seeing things .. but if it turns out it is a close likeness on the coin .. I wonder how the Mint would allow such self promotion … shades of government folks from days past who put their likeness on fractional currencies until Congress banned that practice … (I notice that in the US Mint photo Leroy is showing the reverse of the coin, not the obverse with the “soldier” ..maybe the Mint can see the resemblance too ?)

John, I think the entire block chain crypto currency fundamentals comes down to three parts, Internet connectivity, blocks in a block chain capable of holding records of transactions, and lastly a highly encrypted code which is the coin.

John, The records of transactions in the block chain is so well done that every individual bit of these coins is accounted for so therefore it’s limited unlike cash. As long as there is somebody who wants even a small piece of one bit coin the price continues to go up.

Millions and millions of year ago, precious metals were made in the hearts of stars, and then distributed throughout the galaxy when the star explodes.

Tiny quantities of them congealed with the rest of the matter than makes up the Earth, and are deposited in the Earth’s crust by various physical processes.

If you understand and can appreciate astronomy and chemistry and physics on some level, precious metals do have some inherent interest. That doesn’t make them good investments, but I do think people will be interested in them until our brains undergo even more sophisticated evolution.

Bitcoin may be a great short-term vehicle for speculation, but some guy just made up this concept, and other people are now making up other virtual currencies, and in my view they are not in any way suitable for long term holding, and are unlikely to have long term demand.

Novice questions for Dustyroads, if the blockchain is public, then is the hack also public? How does bitcoin vanish (or reappear) from the chain. What about hardware failure with no back up? If there are only so many coins to go around as coins are lost then there are less of them which make the price go up, so in theory the price keep going up forever as long as people still want to use the platform and coins are removed / lost.

Everyone interested in bitcoin ought to be able to make their own brand. I read recently that Burger King and McDonalds were starting their own versions. If Chuck E Cheese ever does a startup I want to get in on the ground floor of that one.

Erik, Do you think there will ever be a good use for a decentralized currency that no Government or bank is controlling? I find that to be the central theme in crypto circles. Peer to peer.
As for having computer problems, maybe it’s time to build a better one.

Yes, I’m in to “alternative” just about every but I noticed you did answer my question. Can’t seem to find the answer on the web either. I saw on the web people that promoted bitcoin as a solution for Puerto Rico but nobody I know in the Caribbean that went through Irma or Maria (myself included) couldn’t use anything but cash for weeks not days. Even the government’s own DSNAP didn’t work. Do I wish I bought Bitcoin when it was under $5, yes. As someone who works internationally do I wist there were better payment systems that don’t cost as much, yes (but I do have a no exchange rate fee CC). However as long as I make more money spending the bank’s money (credit card rewards) than I can depositing my own money, I’ll keep using C.C. If my bank gets hack I know I’ll get my money back what about crypto exchanges??? If / when bitcoin does become the platform of choice it might actually function as a currency and I’ll probably use it but right now I like physical.

For those that think is fun to give cashiers half dollars & dollar coins, I enjoy the confused look on a cashiers face when I give them extra bills or coins in order to receive a single note in change. Maybe I’ll give $21.15 on a $16.15 tab. Lots of times they want to give me the dollar back before they calculate it in the computer. The other day a cashier said she couldn’t take my change because she already put the total in the computer. After asking if she could make change in her head she’s got confused and gave me $20 extra (she didn’t take my change so she just needed to count the $$ the way her register displayed). She looked even more confused when I counted the money back to her and handed her the $20.

Erik, I’ll answer your question the best way I know how. The technology is new, it’s in it’s infancy stage. There are a lot of problems with legalities. To be honest, it’s just not to the point of very much oversight, but there are a lot of people who feel that it’s that oversight they are afraid of. I have been aware from the beginning that some form of regulation would be inevitable. Now, about a hacked account or exchange leaving a trail in the blockchain, the transactions are present, but that is about all your going to find. And because it will never lead you to a culprit, then one could say it’s like a Swiss bank account in your pocket. One other term that pops up a lot, “disruptive”.
Oh it can be the wild wild west, that’s why people need to be safe.

I remember 2008. A bubble or two POPPED. …. no Detonated…. high up in the stratosphere. The pulse wave disrupted the entire earth ! The personal fallout for me…. my Auto Factory closed. I ended up getting a transfer to the Metro Detroit Jungle Hell original house of pain. Been living in my own personal ” Valley of the Shadow of Death” ever since then.

Is the current Bitcoin Sh*tcoin going to cause an even Bigger POP? That’s what this earthling is expecting. Can’t realistically see unlimited wealth created out of thin air.

Bitcoin approaching $19,000 as I type. Let the madness continue. I don’t think this will end well.
When the bubbles implode, they usually take EVERYTHING with them, including precious metals. Keep some powder dry, and watch out when the futures on bitcoin start trading next Monday.

I been jonesin for a monster box of Silver British Britanias for a while now. If Silver hits a super low, will Dealers sell cheaper? Or will they just tack on a super high premium to keep prices exactly where they are?

Oh well, I get some Britanias, maybe I don’t. I got bigger worries that that to keep me busy.

All of us that didn’t buy the Boys Town uncirculated gold in the last 10 months it was available now appear to be SOL. Horrors! No, I don’t think so. Wait awhile and if you still want it, it will be selling at bullion = 1% – maybe. I also look for the bull market to be ending soon, and yes, stocks and PM can go down at the same time. Remember the Great Depression? There have been other times too. Our leaders ion Congress are almost insuring that we will have a major recessing coming.

Bigguy, I will explain. The 2669 number is what was sold through Midnight Eastern time on Dec 3rd. They didn’t sell out until sometime today so who knows how many were sold. They went on backorder status late Dec 5th which probably accelerated interest.. Did anyone buy after the backorder status? If so is your order still active or was it cancelled.

They have been selling close to 175 a week for the last 3 weeks. (rough guess). When people saw the backorder status purchases could have increased. It was also mentioned on previous thread that the proof buffalos went up nearly 500 from their Sunday night number until they sold out on Monday the 27th. We will have to wait until next week to know for sure. They may have sold a 100 more or 1000 more. Hard to say. That is why I am asking if backordered orders are still live. If so the number could be higher. If not maybe the mint just screwed up on what status they put the coins into and they really sold out on Tuesday in which case the total says # may be on the lower end of the spectrum of 100 to 1000.

Live and confirmed
Backorder to the USM means they are either awaiting more stock or will commence striking addtl coins for sale
They will sell until all available coins that have been minted are sold
Since it’s so late in the year, no chance of another production run, it’s over

Ok Thanks Mintman. I would guess there is a 99% chance you are right. You never know with the mint. I can’t remember what it was a few years ago that was Sold Out and then came back and was for sale again for a little while and I didn’t think that could happen.

Anyone who wanted these coins had plenty of time to buy them. They may be an all-time low, but I don’t think that will have a lot of impact in the future second market, after maybe a brief frenzy. Mintages are declining every year, so collectors should expect future offerings to be even lower, just like this Boys Town is lower than the Jackie Robinson BU gold coin, which went up for quite awhile and now is coming down. Eventully all of these gold coins are going to se3ttle at a value just above bullion. Check out aqll the gold commemoratives from 1984 to date, and you will see what I mean. This is a classic example of “regression to the mean” at work here.

This was a surprise gentlemen. I’ve been into moderns since the beginning – and I believe what we have here is a deep “valley” in terms of mintage. This isn’t the subtle decreasing demand from 5,167 to 5,150 to 5,000 to 4,800; this is a surprise severe dip.
I don’t think you will see one this low, even in the next issue, or for that matter for the new several issues.
If this is 3,500 or below, this one record will stand for quite a while, IMO. If it is sub 3,000 – this will be a $1,500 plus coin raw.

Well yes its sort of like fools Gold. I’d like to suggest that its more a Fools POG though.

What exactly is bitcoin? Do people actually buy things with it or just speculate on it? Is it like having a $100 Bill and selling it for $200 ? New owner sells it for $500? Next it gets sold for $1,000. Each time its value is exactly what was paid for it? Why does it keep being bought at a higher value? Its really nothing, how can it be anything but what it is? Sucker Bait.

@ So Krates…and others here.
I’m starting to upload the videos. I haven’t had time to read comments here lately, so I’ll try to catch up later. Right now I have some time to upload, so I’ll upload as many as I can tonight.
My channel on Youtube is MusicByJM…
or here is one link to a vid https://youtu.be/UKfPZeBqtAo
Remember, they will be removed Dec. 31st.
Happy holidays everyone!

@ Joe M – Excellent, I’ll take a look tomorrow. I’m sorting through a bag of 64-D dimes tonight for a lot I’m putting together for a trade tomorrow and just noticed the misplaced mintmark variety was discovered by you?

The long term fair value of bitcoin is $0.00 – though it may trade hands at other prices for a while.
BITCOIN being “digital gold” is not a feature – it’s the biggest flaw – the most important thing about holding gold/silver is that you dont have to worry about looking down and seeing that suddenly your hand is empty because someone just hacked and stole all your precious metals – or you lost your metals forever because you lost or forgot a giant password.

BITCOIN & CRYPTO requires electricity & computing power, at all times, to be usable – ask the ppl in Puerto Rico how useful it is “in a crunch”!

At best, some cryptocurrency – probably not BITCOIN or any current one – may take significant market share from Western Union & Money Gram – crypto is cheaper for international transacting, much worse for everything else – but that’s it. bitcoin and any other “fiat crypto” will never be a legit threat to real currencies or precious metals.

BITCOIN is essentially the first big “blockchained money” – it’s the friendster/myspace of it’s day.

What’s ONE good thing about the Mint’s customer base going from 1,200,000 to Below 500,000?

Answer: You have Fewer Pumpers Pumping…

ANYONE that has been on this blog and looked at weekly sales numbers has KNOWN for MONTHS that the BT Proof Gold and the BT Uncirculated Gold will be ALL TIME Lows.

It just does NOT matter

The 2017 Buffalo Gold is ALL TIME Low
The 2017 Uncirculated AGE is ALL TIME Low
The 2017 Proof AGE is on pace for ALL TIME Low
A couple of the FS coins are on pace for ALL TIME Low
These are just ALL TIME Lows for Gold
Etc, Etc, Etc…For Silver and Clads…

Anyone that chases these Low Mintage Wonders are going to Lose their money in the Long Term.

If you Pumpers want to Pump what Everyone has KNOWN for months then PUMP away. These BT commemoratives have been on Sale for 273 days with virtually NO interest and Now by cutting off sales 21 days early for the BT Gold Uncirculated you’re going to CREATE interest. I’m not buying that argument in the Long Term.

Within 5 years the United States Mint will be rolling out Gold coins with a Mintage Limit Lower than what you are seeing now as final numbers on these items…

@cagcrisp – Very good summary of the declining collector market for US Mint products. Very few winners to be had out there and its hard to see this market rebounding anytime soon. My total purchases from the Mint this year hit a 8 year low. But, I still like coins and will not be exiting my collecting entirely.

As far as declining numbers, don’t you think there is a chance that these declining sales figures, and forfeiture of the surcharges by the organization due to low #s, could change the dynamic from instead of having 2 commem series per year no matter what, that it reverts to irregular issues for worthy topics only? The rules were changed in the first place because they weren’t selling enough of each design, but those sales were much higher than we see now.

The Mint can invent new stuff to sell, without having to make this oddball stuff with coin silver and impure gold, which are nowhere near the modern standard these days. I would like to see the commems cut WAY back.

Cag,
Agree with your synopsis on all time lows and demand with one caveat – should the shiny stuff start another bullish leg, demand for mint stuff will expand.
It’s still a sure fire way to insure you are getting REAL gold for your fiat….unlike buying it from someone who might have had a Chinese connection 😮

@Buzz Killington, “don’t you think there is a chance that these declining sales figures, and forfeiture of the surcharges by the organization due to low #s, could change the dynamic from instead of having 2 commem series per year no matter what, that it reverts to irregular issues for worthy topics only?”

I Agree. That would be a very Logical conclusion, however, you’re dealing with Congress. I have no idea what motivates these Congressmen to sponsor the commemorative bills that they do. They should know beforehand that very few will pay out the surcharge. Do they just not care about the surcharge and just allow the Mint to make more money to pay to the Treasury? Does ego and prestige drive Congressmen to sponsor the commemoratives? Congress has mandated many of the clad series that LOSE money year after year after year and yet they have no inclination to discontinue money losers.

Maybe we get a new Mint Director things will change. Something HAS to change with the Mint. On the bullion side, this is the worse year since 2007 and my guess is that FY17 for the numismatic side of the Mint will be the worst in several years…

I’ll Agree with that. The “should” is the question. For me you have to have a Viable secondary market and the secondary market on modern Mint coinage is just not there. You have to have something to turn that around and I don’t see with the demographics of the Current Mint customers and the Declining Disposable Income of the Millennials that it will happen anytime soon…

Cagcrisp, bought 2016 national park unc gold for around 450.00 from the mint sold it for $1200.00 ,so explain how that is losing money on a low mintage gold coin from last year, if you think I was just lucky i’ll show you a list of modern comm. with low mintages I have sold for a very nice profit, I have been collecting for 65 years and I always thought low mintage was one of the keys to saving coins,as soon as the mint come out with something this post always light up with how many are being made ,I would rather buy a coin with a mintage of 3,000 than I would 50,000 75,000 or 1000,000. of these silver eagle.Everybody always excited about all of the silver eagle sets and proof eagles that come along ,and I can tell you for sure that 3,000 or less Boys Town, or National Park gold is going to be worth a lot more than a lot of these silver eagle that people get so excited about

I was going to get BOys Town BU in a week or 2; oh well, I don’t care about the design but I agree w//others that collecting these is diminishing & falling toward bullion. Check the bay $5 NPS unc @ 449. mintage 5,150! Sad I got a few of those, buy more maybe, maybe not. As to the PROOF Boys Town, they are also in the 3 coins Bpy$ Town (Subject Zzzzz set) & the number I think in reality is about 7,000 CAG???? Check the #s on the BU $1 boys town, 10k maybe abetter shot, maybe not, who is going to be hot for Boys Town? Girls maybe, or Father Mulcahy! Oh he passed away, & I fear collecting is going there soon “collecting” rare dates, Whitman folders, Dansco books, for those <30 they're like Buggy Whips…. Bitocin set for a correction how much we'll see, but the problem is iF the Government decides No No it goes, & now that you can drop your IRA $ into it I think "Elivi$ has left the building" we'll see, now I need to find a nice 05-o Barber 1/2 to finish my Barber set………good luck all…..and maybe Flanagan get ret'd by folks not liking a non MS70… we'll c

Got a Ronald Regan P$ in the tip box yesterday ! Also have the Fr. Flanagan on backorder charge pending! Had 1 in the cart also and that one states this item is currently not available? So maybe they are waiting for non 70’s? I can see it now the Fr. Flanagan hits the 10,000’s they are calling it the new 2bitcoin ? Well a guy can dream right? My order was put in on the start of the 7th. day so should not have too much worry but bet they over sold it? Well Good Luck All “>

Doing a search on the bay for “2016 National Parks Gold” and I get the Last OGP Gold Uncirculated National Parks Service Sold on the bay was for $427.00 on November 12th. Previous to that the Last was for $405.00 on September 10th.

…SO…IF someone did (as You say) Buy at $450.00 and Sold for $427.00 or $405.00 on the bay, then they Lost money.

Here is my Exact quote “Anyone that chases these Low Mintage Wonders are going to Lose their money in the Long Term.”..

“prices zoomed up to almost $20,000 from $16,000 in only about 90 minutes — then crashed back down”

Legitimate markets do not have price action like this. It’s everyday with crypto-non-currency’s

Bitcoin is being manipulated upwards to the extreme – pumped & dumped – just in time for futures contracts to launch within days!

“Bitcoin’s rally of more than $3,000 in the past 24 hours continues to defy its legions of skeptics, as mainstream demand for the world’s largest cryptocurrency explodes”

Tell your kids & grandkids to sell outright immediately, or put a tight stoploss on their crypto holdings – neither may work though, because most exchanges are “unable to load” while prices “explode”

“one of the largest U.S. online exchanges crashed and continued to suffer from service delays. a wallet service tweeted that it’s having “issues” with its servers, while the largest bitcoin exchange in the world, said that it has been under a denial of service attack for several days and that it recently got worse”

RIP BITCOIN 2009-2017
BITCOIN “investors” GAVE ALL
… their life savings to the pump & dump crypto scammers that Obama & Trump should have arrested, but didnt!

cagcrisp: “Here is my Exact quote “Anyone that chases these Low Mintage Wonders are going to Lose their money in the Long Term.”..

Truer words were never spoken. Thank you for your well-thought out analyses; we are lucky to have you on this forum.

AAs for the commems for 2018, I actually thought they would be neat coins, but I have lost all interest in them. The “pink gold” is just another gimmick, and the WW I soldier looks like he was in a fight and got his nose broken and his eye put out. Shrapnel, maybe?

I think the mint need to bring back the face value Prez$1, how many are totting away? Melting costs more. I looked @ inventory bag$ of Cleveland, Hoover, Wilson, etc. I will have to spend them it seems… I also just bought the 2017 HR medal, on eBay for $33 w/free shipping OMP……maybe worth a shot, or gift…..

1RIGHT NOW:
Bitcoin equals
$16,665.51 US Dollar HOLY SChNIKE….. a modern pig in poke IMHO, but what do I know about these I
“I know nothing” Sgt. Bitcoin Schultz